Best Short-Term Business Loans 2016

Small Business, Small Business Loans
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Short term business loans can help in an emergency

Short-term business loans can get you the money you need to bridge cash flow gaps, handle emergencies and unexpected expenses or take advantage of a business opportunity.

This type of financing provides quick cash in the form of loans or lines of credit, typically in amounts from $5,000 to $300,000, with short repayment terms and looser qualifications than long-term loans.

Because short-term business financing generally has high borrowing costs, the ideal approach is to choose funding with the lowest annual percentage rate you can qualify for. When deciding between a short-term loan or short-term line of credit, remember that lines of credit are more flexible and generally have shorter repayment periods.

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Short-term lines of credit

Short-term business loans

Pitfalls of short-term business loans

Short-term business loans: Summary of options

Repaying a short-term business loan on time can help you qualify for a long-term, less expensive business loan in the future. Long-term loans typically come in amounts from $250,000 to $1 million or more and have a repayment period of five to 15 years or longer, making them better suited to a real estate purchase, business acquisition or debt refinancing.

Short-term lines of credit: Kabbage, BlueVine and Lending Club

With Kabbage’s line of credit, you borrow only the money you need and pay fees just on the money you borrow. That flexibility makes it a better option for managing cash flow than for a larger expense such as an expansion. You repay each draw on the line of credit over six or 12 months.

It’s also fairly easy to qualify (take a look at minimum qualifications below) and a good option for borrowers with bad credit. Although Kabbage does check your personal credit score, it doesn’t weigh the score as heavily as other factors, such as your average monthly revenue. The ease of qualifying comes at a cost, however, as Kabbage carries a higher APR than other lines of credit.

Kabbage
  • Loan amount: $2,000 to $100,000.
  • APR: 32% to 108%.
  • Loan term: Six or 12 months.
  • Funding time: A few minutes to several days.
  • Read our Kabbage review.
Get started at Kabbage

Before you apply for a Kabbage loan, find out whether you meet the minimum qualifications.

  • No minimum personal credit score required.
  • 1+ year in business.
  • $50,000+ in annual revenue.
  • A business checking or online payment platform required.
Do I qualify?

BlueVine is a good option for businesses with less than a year of history that need to borrow a small amount of cash. The lender requires a minimum of six months in business, with borrowing limits ranging from $5,000 to $50,000. You repay draws on BlueVine’s line of credit weekly over six months. It’s a less expensive option than Kabbage, with APRs ranging from 16% to 62%.

bluevine
  • Loan amount: $5,000 to $50,000.
  • APR: 16% to 62%.
  • Loan term: Repaid over six months.
  • Funding time: As fast as 24 hours.
  • Read our BlueVine review.
Get started at BlueVine

Before you apply for a BlueVine line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.
  • 6+ months in business.
  • $60,000+ in annual revenue.
  • Personal guarantee required.
Do I qualify?

If you’re looking for the lowest rates, Lending Club is the best option. Its line of credit carries an APR of 8% to 32%. It’s also a good option if you need to borrow a large amount; its lines of credit max out at $300,000. You repay draws over as long as 25 months, but you can pay off the line of credit at any time to save on interest, with no prepayment penalties. Lending Club, however, is also the hardest to qualify for. You’ll need strong credit, annual revenue starting at $75,000 and years of business history.

LendingClub-box
  • Loan amount: $5,000 to $300,000.
  • APR: 8% to 32%.
  • Loan term: Repaid up to 25 months.
  • Approval time: Less than a week for funding.
  • Read our Lending Club review.
Get started at Lending Club

Before you apply for a Lending Club line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.
  • 2+ years in business.
  • $75,000+ in annual revenue.
  • Own at least 20% of the business.
  • No recent bankruptcies or tax liens.
  • Provide collateral for loans and lines of credit of more than $100,000.

Lending Club is currently unavailable to borrowers in Iowa and Idaho.

Do I qualify?


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Short-term loans: OnDeck and StreetShares

OnDeck’s term loan is a good option for small-business owners who need fast cash for a short-term business opportunity or a small expansion, such as a marketing campaign. The lender provides short-term business loans repaid daily or weekly over three to 36 months. To qualify, you’ll need at least a 500 personal credit score, a year of business history and $100,000 in annual revenue. Besides meeting OnDeck’s minimum qualifications, your business must not be on its restricted industries list, and you can’t have had any bankruptcies in the past two years.

OnDeck
  • Loan amount: $5,000 to $500,000.
  • APR: 9% to 98%.
  • Loan term: Repaid daily or weekly for three to 36 months.
  • Funding time: As fast as 24 hours but typically a few days.
  • Read our OnDeck review.
Get started at OnDeck

Before you apply for an OnDeck loan, find out whether you meet the lender’s minimum qualifications.

  • 500+ personal credit score.
  • 1+ year in business.
  • $100,000+ in annual revenue.
  • No bankruptcies in the last two years.
  • Personal guarantee required.
Do I qualify?

A lower-cost alternative to OnDeck is StreetShares. It has a lower annual revenue requirement than OnDeck, at $25,000, and weekly rather than daily payments. You repay StreetShares’ loans over three to 36 months. Businesses can qualify for a loan amount of up to 20% of their annual revenue; for example, a business with $300,000 in revenue could qualify for up to $60,000 in financing. StreetShares also doesn’t charge a prepayment penalty, so you can repay the loan early to save on interest.

StreetShares-e1459274893272
  • Loan amount: $2,000 to $100,000.
  • APR: 9% to 40%.
  • Loan term: Three to 36 months.
  • Funding time: One to five days.
  • Read our StreetShares review.
Get started at StreetShares

Before you apply for a StreetShares loan, find out whether you meet the lender’s minimum qualifications.

  • 600+ personal credit score.
  • 1+ year in business.
  • $25,000+ in annual revenue.*
  • No bankruptcies in the past three years.
  • No current tax liens or collections (unless you have proper documentation).

You only need 6 months in business if you have $100,000+ in revenue.
StreetShares is currently unavailable to borrowers in North Dakota or South Dakota.

Do I qualify?


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The pitfalls of short-term business loans

There are a few disadvantages to short-term business loans that small-business owners should keep in mind:

Higher cost: They typically carry a higher APR — the total annual cost of borrowing, including all fees and interest — than long-term loans. That’s due to their shorter repayment period, faster funding, looser qualifications and the fact that many are unsecured business loans, which don’t require collateral. Use NerdWallet’s business loan calculator to figure out how much a loan will cost you.

Risk of debt trap: The speed and ease of short-term business loans can become addictive. Instead of repaying the debt in full, business owners may be enticed to refinance and roll over the debt into a new loan. But this can result in a debt trap: continual refinancing just to keep up with payments. This is a common issue with merchant cash advances, a costly form of short-term financing. If you have several high-interest small-business loans, business debt consolidation may be the solution you need.

More frequent repayments: Lenders may require you to make loan payments daily or weekly as opposed to monthly. Although these payments are smaller, their frequency can be an issue for businesses that have uneven sales or those that don’t always hold much cash in a bank account. You’ll have to make sure you have enough money in your account to make the payments at all times, or you’ll risk incurring fees or defaulting on the loan.


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Short-term business loans: Summary

Funding optionsGood option for:Loan Amount & APR
Kabbage loans
Get started at Kabbage
• Bad personal credit.
• Fast cash.

• $2,000 to $100,000.
• 32% to 108%.


Before you apply for a Kabbage loan, find out whether you meet the minimum qualifications.

  • No minimum personal credit score required.

  • 1+ year in business.

  • $50,000+ in annual revenue.

  • A business checking or online payment platform required.



Do I qualify?
bluevine
Get started at BlueVine
• Financing smaller investments.
• Newer businesses.
• $5,000 to $50,000.
• 16% to 62%.


Before you apply for a BlueVine line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.

  • 6+ months in business.

  • $60,000+ in annual revenue.

  • Personal guarantee required.



Do I qualify?
lending_club_logo_new-249x47

Line of credit

Get started at Lending Club
• Good personal credit.
• Established businesses.
• $5,000 to $300,000.
• 8% to 32%.


Before you apply for a Lending Club line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.

  • 2+ years in business.

  • $75,000+ in annual revenue.

  • Own at least 20% of the business.

  • No recent bankruptcies or tax liens.

  • Provide collateral for loans and lines of credit of more than $100,000.


Lending Club is currently unavailable to borrowers in Iowa and Idaho.

Do I qualify?
OnDeckForTable
Get started at OnDeck
• Bad personal credit.
• Fast cash.
• $5,000 to $500,000.
• 9% to 98%.


Before you apply for an OnDeck loan, find out whether you meet the lender's minimum qualifications.

  • 500+ personal credit score.

  • 1+ year in business.

  • $100,000+ in annual revenue.

  • No bankruptcies in the last two years.

  • Personal guarantee required.




Do I qualify?
StreetShares loans

Get started at StreetShares
• Good personal credit.
• Newer businesses.
• $2,000 to $100,000.
• 9% to 40%.


Before you apply for a StreetShares loan, find out whether you meet the lender's minimum qualifications.

  • 600+ personal credit score.

  • 1+ year in business.

  • $25,000+ in annual revenue.*

  • No bankruptcies in the past three years.

  • No current tax liens or collections (unless you have proper documentation).


You only need 6 months in business if you have $100,000+ in revenue.
StreetShares is currently unavailable to borrowers in North Dakota and South Dakota.

Do I qualify?

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Find and compare the best small-business loans

NerdWallet has created a comparison tool of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.

Compare business loans

 
Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.

Updated Sept. 13, 2016.

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